The World from Berlin: 'The International Financial Institutions Are Overwhelmed'
As the richest nations prepare to meet in April, the World Bank has warned of a $700 billion shortfall in developing countries and the IMF is asking for donations. German commentators wonder whether the two organizations are up to the task of dealing with the crisis.
The financial crisis may have originated in the investment banks of Wall Street and the City of London but it is now being felt by the world's most vulnerable people, those living on the verge of poverty in the developing nations. As the G-20 group of world's richest countries prepare to gather in London on April 3-4, the World Bank is pleading with them to continue supporting the poorer nations saying that international financial institutions cannot bear the burden alone.
Indian homeless people eat at a feeding programme for the poor in Hyderabad.
Speaking in London on Monday, the bank's managing director, Ngozi Okonjo-Iweala, said that G-20 countries could actually make a quicker recovery if they targeted support to help developing nations which would in turn create new markets. "It is a question of justice, but it is also a question of economics and self-interest," she told Reuters while attending a conference on global poverty.
Anti-poverty campaigner Bob Geldof told the conference that governments should "hold their nerve" in sticking to pledges to help the world's poorest nations and British Prime Minister Gordon Brown said that he would be pushing the other G-20 nations to create a World Bank fund to help cushion the impact of the crisis on the most vulnerable nations.
Meanwhile on Tuesday European Union finance ministers were gathering to back an International Monetary Fund (IMF) call on the G-20 nations to double its funds to $500 billion to help fight the global economic crisis. EU members Hungary and Latvia have already turned to the IMF for help and on Monday Romania's President Traian Basescu said that a foreign loan would be the only way to rescue his country's struggling economy.
On Tuesday the German papers take a look at the role of the international financial institutions in coping with the crisis.
The business daily Handelsblatt writes:
"The developing countries face a shortfall of $700 billion -- for this year alone. The question now is who is supposed to fill this gigantic hole.... The international financial institutions are overwhelmed, the industrial nations are busy with their own problems. The developing and emerging nations cannot expect much help."
"Thus, it is all the more important that the G-20 states meeting at the beginning of April not only agree on the future regulation of the financial markets but also on a better harmonization of the global stimulus policies. The separate actions by the industrial states threaten to have little impact if they do not succeed in stimulating global demand."
"In this global crisis the state, institutional and private efforts have to be much more closely linked than they have been so far. The global economy can only return to growth in 2010 if it is possible to combine a stimulation of consumer demand, tax cuts and targeted investment in such a way that their effects go beyond national borders. That is the task of the G-20."
The left-leaning Die Tageszeitung writes:
"The (IMF and the World Bank) have not proven themselves as crisis managers. Their neo-liberal formulas made the Asian crisis worse and led to prolonged stagnation in Latin America and Africa. But what alternatives are there today for the struggling developing and emerging nations? Almost none."
"It is all the more important not to repeat the old mistakes. If the EU is demanding a stronger role for the IMF and World Bank ahead of the G-20 meeting -- even if it is coupled with the demand for more influence for developing nations -- then that is not going far enough. The G-20 should turn the tables and say that the IMF and the World Bank will only get more money if they meet strict criteria. In particular they must abandon their policy of deregulation and privatization. Because these formulas have not only pushed many developing nations, but the entire global economy, into the abyss."
The conservative Die Welt writes:
"The crisis does not differentiate between the wealthy industrialized nations and the poorer countries of the Third World. Of course the business model in exporting countries like Japan and Germany is being tested However, the consequences for developing and emerging countries that have profited from the rising demand for raw materials, textiles and groceries in recent years are even worse. In these countries it is not a question of a loss of jobs and wealth but a question of their very existence."
"All those critics are wrong who see the crisis as the final proof that capitalism and globalization are the devil's work. The recession is only hitting those emerging economies with such vehemence because globalization had made economic integration and the accumulation of wealth possible. And the industrial nations will hardly be able to return to growth without activating demand in the emerging markets."
"People are all sitting in the same economic boat -- that is the decisive lesson from this crisis. The fight against protectionism must therefore be right at the top of the agenda at the world financial summit in London."
The left-leaning Berliner Zeitung writes:
"The World Bank warns that there is not enough support for weaker countries.... President Robert Zoellick is calling on further investment in the developing nations. However, this is wishful thinking in the face of the great uncertainty felt by banks and investors. Even big companies in industrialized nations are finding it hard to get fresh capital. Who is going to support companies in countries that were already on the verge of collapse before the crisis?"
"It is the World Bank itself that has to help: They will issue more bonds for private investors. This could prove successful because such bonds are popular with investors. After all the strong donor nations are backing them. Companies in the developing nations can bypass the credit crunch this way -- if they can pay the interest. The poorest of the poor cannot. That is why the World Bank is dependent on classic development aid and the donor nations must not be allowed to shirk their responsibilities in times of crisis."
-- Siobhán Dowling; 12:20 p.m. CET
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